POLICY: What’s right about Krugman? What’s wrong about Don Johnson?

Krugman’s series on health care continues in the NY Times and no doubt Don Johnson (over at BusinessWord) will be fulminating over this too. Don got a little offended when I called his stance mean. Don is a sensible guy and understands health care well, even if we disagree on on policy and politics.  So what do I mean by "mean".  Let’s ignore the fact that Don thinks that moderate social democrats like Krugman and Uwe Rhienhardt are the hard left — any observer of real politics would be giggling at that one.  I mean have they seriously suggested nationalizing health care delivery? No. Let alone nationalizing steel, autos, oil, and even agriculture.  (Yup, Don, that’s what the "hard left" from Lenin to Bevin did.  By his standards FDR was a Bolshevik).  But let’s look at Don’s opinion:

"I guess it’s ‘mean" to advocate regulated free markets that:
1. Help us have the lowest unemployment levels and lowest income taxes.
2. Give people who take the time to become educated, find rewarding jobs and seek out health care providers they like the freedom to spend their money on health care, if they think that’s important.
3. Try to minimize the role of centralized governmental planners who’ve never successfully created a health care system that cares for everyone in the country and makes everyone happy.
4. Give everyone incentives to earn the money needed to buy the best health care they can afford.
5. Not force wage earners to pay for the health care of strangers who could buy their own insurance if the politicians weren’t so good at giving everyone else’s money away in exchange for votes of the unthinking left."

The problem with this rhetoric is threefold. First, even if one accepts that we have "regulated free markets" in the rest of the economy and all those commies in Europe, Canada and Japan don’t, no one can seriously maintain that health care is a regulated free market like, say, buying groceries. It fails all of Adam Smith’s sniff tests for being in a state of perfect competition, and any serious student of the subject only has to read another Princeton hard lefty Paul Starr to know that the combination of vigorously pursued professional hegemony and third-party payment has left us with a system run by providers of various types, mostly for their own benefit.  So health care isn’t a regulated free market and people aren’t in a position to "spend their money on health care, if they think that’s important" the way any rational economist would understand–even if the vast majority of people didn’t have third party payment to cover that spending — which they do.

Second, Mark Pauly, a health care economist who is in Don’s camp wrote a hysterical piece in Health Affairs a few years back suggesting the reason we were so inefficient in our health care spending and spent so much on it, was that we were so efficient in the rest of the economy —  and could therefore afford to act like drunken sailors when it came to health care. I never understood why just because we had (apparently) lots of money to spare because we are a rich and productive nation, we should spend it all on a very inefficient health care system rather than, say, on Frappuchinos, education for first graders, or invading foreign countries which don’t have anything to do with us. There is no rational connection between the overall economy and how we choose to allocate resources to health care.  How we allocate resources to health care, and how much we allocate, is largely a political question. It’s directly political (in the 50% that the government pays for) and indirectly political in how (in order of importance) the government treats the taxation of health benefits, how it controls the industry’s pricing and capital spending, how it encourages its citizens to allocate their resources, and how it allows lawyers to persuade doctors (and doctors to persuade doctors, and drug companies to persuade doctors) that more care rather than less care is better. What any of that has to do with overall productivity in the economy escapes me. Finally while it may be a nice idea that health care is a luxury good that consumers will buy on the margin in preference to other luxury goods, that is not how we’re buying it yet and won’t be for quite some time.

But the third issue is where I call Don mean. Politically we have a straight choice.  We know that the costs of the health care system fall disproportionately on the poor and the sick.  And we also know that access to health insurance coverage is lower among those groups. Suggesting that people could voluntarily buy health insurance but just aren’t doing so is in my opinion total BS, and appears to be backed up the the opinions of America’s employees who are desperate to maintain their health benefits from their employers. Further we know that those without health insurance struggle mightily with the costs of care, and many more of them are in trouble than their equivalents in other countries where their access to coverage is subsidized by those people paying those high taxes that Don obsesses about (something else that needs to be refuted in another post).

You may recall that in the last couple of years we’ve had the ability give big tax cuts to the rich, and to spend nearly $100bn a year invading Iraq. The money that went on either of those political initiatives would have easily covered expanding health insurance coverage for those at the bottom end of the social ladder. In general you’re either for this or you’re against it.  And I think that, knowing the consequences of not having insurance on the health and wealth of those without it, to take the "against" position is mean.


Categories: Uncategorized

Tagged as: ,